ADDITIONAL COMMISSIONER OF INCOME TAX Vs. CHEMICAL LIMES

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, has referred the following question for answer to this court:

(2.) THE facts giving rise to this reference briefly stated are that while making the assessment of the assessee, M/s. Chemical Limes, Jodhpur, for the assessment year 1964-65, the ITO charged interest under Section 139 of the I.T. Act, 1961 (hereinaftercalled "the Act"). THE assessee thereupon filed an application under Section 154 of the Act for rectifying that order by waiving the interest under Section 139(8) of the Act. That application was, however, rejected on October 3, 1970. THE assessee again moved an application under Section 154 of the Act alleging that the earlier application under Section 154 of the Act had wrongly been rejected without considering the grounds mentioned in it and without hearing the applicant and praying that the original order of assessment still suffered from an error apparent on the record and, therefore, it deserves to be rectified. This application was accepted by the ITO by his order dated December 10, 1970, and the interest charged under Section 139 was cancelled.

(3.) THE learned counsel for the Department urged that under Section 139(8) of the Act, the ITO had a discretion to waive or not to waive the interest chargeable under that section and when the ITO had charged interest while making the assessment, the same could not have been waived by him by exercising powers under Section 154 and, in any case, when the earlier application under Section 154 of the Act had already been rejected on October 3, 1970, there was no question of a further application under Section 154 of the Act being entertained for rectifying the assessment order. In these circumstances, the order passed by the ITO on December 10, 1970, was clearly without jurisdiction and, therefore, the ITO (Adm.) could rectify that order and cancel the same under Section 154 of the Act. In these circumstances, the learned AAC and the learned Tribunal were wrong in holding that the ITO (Adm.) could not have exercised jurisdiction under Section 154 of the Act. He, therefore, prayed that the question referred to this court should be answered in the negative. On the other hand, the learned counsel for the assessee supported the orders of the learned AAC and the Appellate Tribunal.